Ingram Micro (IM) is one of the world's largest distributors of IT products. The company failed to impress with its third quarter 2011 results. Moreover, the soft retail sector in Europe and the Asia-Pacific, as well as the ERP transition issue in Australia resulted in an unexciting 2011 guidance.
Though management appears confident about most of the near-term issues and the regaining of market share in Australia, we remain cautious. Also, while the company's strategic partnerships with IT giants are encouraging, its significant European exposure, high dependence on IT spending and debt-laden balance sheet are causes for concern.
Hence, we have downgraded the stock to Underperform from Neutral. Our target price of $16.00 reflects a P/E multiple of 9.9x our 2011 EPS estimate, which is at a slight premium to the industry average.
INGRAM MICRO (IM): Free Stock Analysis Report
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